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China has reported record increases in travel and consumption during a longer-than-usual Lunar New Year holiday, touting the gains as a sign that the world's second-largest economy is back on the rise Thanks to the government's supportive policies, the situation has improved.
However, average tourism spending per trip was below pre-pandemic levels, according to CNN calculations based on official data, as consumer confidence remains weak amid deflationary pressures.
A total of 474 million trips were made within mainland China during the Year of the Dragon travel season, a 34% increase compared to the same holiday in 2023 and 19% more than in 2019, according to data from the Ministry of Culture and Tourism on Sunday published data.
Total spending by domestic tourists during the holiday was 632.7 billion yuan ($87.9 billion), it said.
However, the most recent holiday period spanned eight days from February 10 to 18, which was one day more than previous periods.
“Supported by various favorable factors such as government policies, [services] “Through supplies and propaganda work, people in urban and rural areas have shown an increasing willingness to travel, with many indicators such as the number of trips and travel spending reaching record levels,” the ministry said in a statement.
This New Year period is the longest in recent history. The holiday previously lasted seven days. It was also the first public holiday since 2019 to be completely spared from the effects of the Covid-19 pandemic.
The ministry did not provide information on the number of trips or expenses per day. However, CNN calculations based on official data suggest that consumption levels were below pre-pandemic levels.
On average, 59.25 million domestic trips per day were made this holiday season, slightly less than the 59.29 million trips per day in 2019.
This year, an average of 166.85 yuan (US$23.2) was spent per trip per day, down 6% from 176.9 yuan (US$24.6) in 2019.
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Passengers at Hangzhou East Railway Station in China's Zhejiang province on February 17, 2024
Travel outside mainland China, including Hong Kong and Macau, was also below pre-pandemic levels, using official figures.
An average of 1.69 million trips were made daily to and from mainland China during the holiday, according to the National Immigration Administration on Sunday. The number was 6% below the 2019 average of 1.79 million daily trips.
“While we see some strength in the data, we urge market participants to exercise caution,” Nomura analysts said in a note Monday.
“We continue to believe that the ongoing economic downturn will worsen through the spring,” they added.
China's economy is struggling with a variety of challenges, including a lack of confidence and deflationary pressures. In January, consumer prices fell at their fastest pace in 15 years, marking their fourth consecutive month of decline.
However, there were some bright spots.
While consumption of high-priced goods such as real estate remained subdued, purchases of cheaper goods boomed.
Movie ticket sales reached a record 8 billion yuan ($1.11 billion) during the eight-day holiday period, according to data released by the China Film Administration on Sunday.
The number of moviegoers also reached a record high of 163 million, it said.
But box office spending alone wasn't enough to address analysts' concerns about growth this year.
A record downturn in real estate The country, which accounts for up to 30% of gross domestic product and 70% of private wealth, has dealt a significant blow to business and consumer confidence.
“The real estate sector remains the biggest drag on economic growth,” said Frederic Neumann, chief Asia economist at HSBC.
“The decline in construction is weighing on investment and hurting industries ranging from steel, glass and cement to construction equipment manufacturers, plumbers and architects. At the same time, falling property prices are weighing on consumer spending as households feel their wealth decline,” he said.
During the holiday season, average daily new home sales in 25 major cities fell 27% year-on-year, according to the latest data from China Index Holdings, a leading private real estate research firm.
Mixed economic data gave markets in mainland China a slight boost as they resumed trading on Monday after the holiday break, but the Hong Kong market, which has been trading since Wednesday, fell.
“The headwinds to growth remain strong and it will take more than just a disruption in leisure travel for market sentiment to recover,” Neumann said. “In particular, investors are still looking for further stimulus to revive growth and are hoping for further details on measures to stabilize the real estate sector.”
The Shanghai Composite and Shenzhen Component rose 1.6% and 0.9%, respectively, on their first day of trading in the Year of the Dragon.
However, Hong Kong's Hang Seng index fell 1%, close to reversing three straight days of gains.
China's stock markets have suffered a lengthy slump since recent highs in 2021, with more than $6 trillion in market value wiped off markets in Shanghai, Shenzhen and Hong Kong.